On April 8th, 2020, the Hong Kong Special Administrative Region Chief Executive, Carrie Lam, announced the government’s second round of anti-epidemic relief measures. After issuing an initial round of measures in the 2020-2021 Budget and the Legislative Council’s Anti-epidemic Fund, the Hong Kong government has determined that the ongoing disruption to economic activity caused by social distancing policies, as well as entire industries going on hiatus, calls for further government intervention in order to protect businesses against bankruptcy, safeguard employment, ease the financial burden on companies and individuals and set the economy up for a full recovery when the epidemic ends.
The new HK$137.5 billion anti epidemic relief package will include a subsidy of up to HK$9,000 per employee, per month for companies that commit to retaining staff, an expansion of the Anti-epidemic Fund to cover 16 additional sectors, a new set of financing support measures including rental concessions, loan programs and repayment deferrals, and extending deadlines across government institutions while increasing the Hong Kong Monetary Authority’s lending capacity.
HK$ 80 billion Employee Support Scheme
The government will be providing salary subsidies to employers that pledge not to make staff redundant. This scheme is open to all employers that contribute to their staff’s Mandatory Provident Fund (MPF). The subsidy amount will be calculated based on 50% of the employee’s salary, with a maximum salary of HK$18,000, the average salary in Hong Kong as of mid 2019. The subsidy will be available for a period of 6 months.
Payments will be made in two phases, the first of which is to begin in June, 2020. Employers in transport, construction and catering, where employees are usually not enrolled in MPF schemes, will be covered by separate sector-specific schemes. Self-employed individuals can opt for a lump sum single-payment, as long as they make MPF contributions. The government has also pledged to create 30,000 temporary jobs with a total value of HK$6 billion in both public and private sectors over the next two years.
Anti Epidemic Fund now covers 16 additional sectors
The original HK$30 billion anti-epidemic fund mainly covered the retail, F&B, construction and property management sectors. With an additional HK$21 billion, the “Anti-epidemic fund 2.0” now covers 16 additional sectors, including:
Government concessions and financing programs
The SME Financing Guarantee Scheme will also increase its maximum loan amounts. The 80% guarantee loan will be increased from HK$15 million to HK$18 million, while the 90% guarantee loan will be raised from HK$6 million to HK$8 million. The special 100% guarantee loan introduced in February will increase the loan amount from HK$2 million to HK$ 4 million. Concessionary interest rates will be provided up to 3% for one year for the 80% and 90% guaranteed loan schemes.
The application period will be extended and publicly listed companies are now eligible to apply for the special loans. The special 100% guaranteed loan commitment will be raised from HK$ 20 billion to HK$ 50 billion.
The government will also be increasing rental concessions to 75%, for tenants of government owned facilities between April to September, 2020. The Lands Department will also be increasing rental concessions up to 75% for short term tenancies between April to September.
Non domestic water and sewage accounts will be eligible for a 75% waiver on their utility bills for an additional 4 months, up to November 2020. Registration and enrolment fees for healthcare professionals will be waived for the next 3 years.
MTR fares will be reduced by 20% for 6 months, starting from July 1, 2020, while the threshold for the public to apply for the Public Transport Fare Subsidy will be reduced from HK$400 to HK$200 during the same period.
Self-financed post-secondary educational institutions and nonprofit international schools will be able to defer loan repayments without paying interest for up to 2 years. Student loans will be automatically deferred interest-free.
The Hong Kong Monetary Authority will permit banks to release more liquidity into the financial system, expanding the banking sector’s lending capacity to HK$1,000 billion, while providing clients with a “principal moratorium” for specified periods, which combined with sector-specific support schemes will provide enterprises with a considerable degree of cash flow support. Meanwhile, the Insurance Authority will permit major insurance providers to offer a grace period on premium payments on life insurance and medical coverage policies.
All government offices will be extending deadlines for project completion while relaxing schedules on payments due on all contracts. The combined value of the first and second rounds of Anti-epidemic relief programs is HK$287.5 billion, which is equivalent to 10% of the region’s GDP.
The HKSAR government intends to continue drawing on the region’s considerable fiscal reserves (HK$1.1 trillion) to support the local economy as it recovers from the unprecedented worldwide economic shocks resulting from the COVID-19 outbreak. We will be providing detailed guidance on how to make the most of the government’s funding programs over the next few weeks.
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